Investment can be done on a long term or short term basis. Returns from investment can be positive or negative. One should aim for positive returns for any investment done and also understand that it is not always the case that they will get a profit. Sometimes it’s a loss, sometimes it’s a break even, sometimes it’s a profit and sometimes it’s an abnormal profit.
Recently the market has been flooded by quick money schemes such as MMM. These kind of investments are dangerous since anything can happen and the money can not be traced and neither can there be any one to be answerable or to sue. Most people forgo real investment for quick money schemes whom whose risky can not be calculated at all. One should seek to understand were their money, time and effort is going to before they decide to be committed. It is very possible to be committed to a project that can bring about 100%loss. So were risk can be calculated, it should be calculated for to avoid the foreseeable loss.
Risk can also be spread by diversifying portfolio. One can invest in two projects that are under different sectors such as cash crop farming and second hand clothes selling. If there are floods, cash crops will be affected and will not do well but the second hand clothes project can still bring in a good profit. Diversifying investment portfolios enables one to survive to still enjoy profits when disaster strike in another sector. It is not always that one sector will not do well, there are times where all sectors will perform and that means more profit will be generated.
Why Investing
- Increase your streams of income. The times we are living in needs one to look beyond their pay check for survival. The more streams of income one has the higher the chances of being able to finance their personal budget.
- Reinvestment. Once one starts earning profits and they practice the principle of saving that we talked of a few weeks back eventually that money will be used to start another project and the projects will increase.
- Social Responsibility. I call this money with a purpose. One needs to be able to give back to the community and lighten the burden for our government. This Enables one to develop the society and at the same time market their business indirectly.
People are afraid to fail, but if you do not try you can not succeed either. Therefore you are better off trying and failing than failing by default of not trying. Step out and invest. Remember to diversify your portfolio in order to spread risk. Calculate risk were possible and avoid the avoidable.
By Mitchell K Name (Economist) namemitchel@gmail.com